Online Travel Giants Set New Record for Marketing Spend in 2023 – PhocusWire

Expedia Group spent $6.9 billion in 2023 for sales and marketing

Financial figures from Expedia Group, Booking Holdings, Airbnb and Trip.com Group – four of the largest online travel agencies in the world – show the companies spent a record amount of money to promote their brands and attract customers in 2023, as pent-up demand from the pandemic is still driving spending.

Collectively these four brands spent a staggering $16.8 billion on sales and marketing last year (reported by Booking Holdings as just marketing), up 20% from just more than $14 billion in 2022.

It’s a clear sign of the intense competition these companies are facing as they fight to capture bookings and as they compete both with one another and with suppliers such as hotels and airlines that are all vying to drive direct business. 

But beyond the eye-popping figure of total spend, Trip.com Group stands out as the company that had the biggest jump in its marketing budget in 2023. After dramatically reducing its spending in 2020, 2021 and 2022 due to persistent COVID-induced travel restrictions in China, last year as restrictions came down the online travel company returned to pre-pandemic levels of marketing spending. In 2023 Trip.com Group allocated $1.3 billion to sales and marketing – an increase of $117% over the 2022 figure of just more than $600 million and on par with its spending in 2019.

But as a percentage of revenue, Trip.com Group is showing increased efficiency in its marketing. The spending was 26% of revenue in 2019, 21% in 2022 and down to 20% in 2023.

In a call with analysts to discuss its fourth quarter and full year 2023 financial results, Trip.com Group CEO Jane Sun said the company is using its marketing budget to enhance its global market presence and also to expand its user base among “elderly demographics” – in the fourth quarter the number of users over age 50 increased by more than 90% compared with 2019. 

“And this is just a beginning to capitalize on the market opportunity for the retired community, which has spending power and ample time,” she said. The company also said it will continue to optimize its marketing spend by focusing on increasing its direct traffic and improving cross-selling within its platform.

Airbnb has always touted the fact that the majority of its traffic – 90% is the latest figure – is direct or unpaid and that it spends a relatively small percentage of its revenue on advertising. In 2023 that figure was just over 18%, with spending of $1.8 billion on revenue of $9.9 billion. 

In a call with analysts to discuss the latest results, co-founder and CEO Brian Chesky reiterated the company’s “full funnel approach.”

“As you know, we have a very different approach to marketing than our competitors,” he said. “We’re not really typically trying to buy customers through performance marketing. We generally … think of advertising more as education than sales.”

Of course, the two biggest spenders in terms of marketing in the realm of online travel are Expedia Group and Booking Holdings.

The two companies account for the majority of the spend among the four brands analyzed, with Expedia Group doling out $6.9 billion in 2023 for sales and marketing (which includes commissions paid to B2B partners) and Booking Holdings spending a bit less, $6.8 billion, for its marketing efforts.

For Expedia Group, which reported full year 2023 revenue of $12.8 billion, that equates to 54% of revenue spent on sales and marketing.

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